LTCUSD: Wholesale Prices In Play But Only For Contrarians.

LTCUSD update: This swing trade has been stopped out at 123.50. This broad market weakness is what scares weak hands out of their positions, and now that this position is stopped out, we will be looking for the next opportunity to buy back in once stability returns.

A few days ago I wrote an article about Litecoin and issued a trade call on S.C. The entry was a limit order at 133.50 and the stop 123.50. I issued this call while it was trading near 140. The scenario that this market is presenting at the moment is the reason why I placed a limit order under the market. I did not know if this retest of the low was going to happen, I just wanted to better positioned in case it did.

This stop out is just a cost of doing business, and it eliminates exposure to a broad sell off (price went as low as 116). Keep in mind, the stop order is specifically for the risk presented by this particular swing trade and has no bearing on any long term positions that I have for this market.

The 132.72 and 125.68 levels are reversal zone boundaries. They present a high probability area where price is more likely to reverse, but there is no guarantee it will. This outcome is part of the risk that is taken when placing a limit order under the market and not waiting for particular confirmation.

Keep in mind the sub 125 levels are what I like to call wholesale prices. It is like when your favorite store puts inventory up for sale because they need to get rid of it. These lows are attractive prices, but in order to get back in for another swing trade long, a reversal pattern will need to appear.

There is no reason to panic or be stressed out by this price action. Remember when a market looks its worst, that is often the best time to buy. Think like a contrarian, not like the crowd.

I wrote in an earlier analysis about this market that the 105 to 100 level is really where cause for concern is relevant. The 100 level is not only a psychological support, but a break below would negate the bullish Elliott Wave count on the broader time frame.

Even in a scenario where price goes below 100, the only thing it would mean for me is not to buy more. Since I do not use margin in these markets, I look at them more like stacking physical gold or silver, which means you do not let go of inventory at lows.

Let the weak hands blow out their positions and react for whatever reason. BTC went to 6K a few months back, only to climb back to 9K. As long as these markets are not pushing any major lows, it is just a matter of time before they find stability. One important point that Andrew pointed out in one of his recent BTC articles was that in order to benefit from sell offs like this, you must believe in the future of these coins in order to add to your inventory with confidence. If you are in this for a quick profit, then you are better off waiting for a swing trade which has precisely defined risk and not cost averaging.

We are going to be watching carefully for opportunities to add to portfolio positions as well as for new swing trades once stability reestablishes itself across these markets.